"We have engaged consultants to merge Liberty Enterprise and Liberty Group marketing division," Adesh Gupta, CEO, Liberty Shoes told CNBC-TV18.
Majority of the capex will be at the front-end
Adesh Gupta
CEO
Liberty Shoes
In an interview to CNBC-TV18 Adesh Gupta, CEO, Liberty Shoes spoke about the latest happenings in the company and the road ahead. The footwear maker is looking to expand its retail presence in southern states and Gujarat and plans to add 100 stores in FY15.
We have been able to add 40 stores in the first half of FY15, he added.
Also Read: Domestic sales to see some improvement in Q2, says Liberty Shoes
Below is the transcript of Adesh Gupta's interview with Reema Tendulkar and Ekta Batra on CNBC-TV18.
Reema: The company has planned some expansion in South India. Can you walk us through your capital expenditure (CAPEX) plans as well as how much the company wants to invest?
A: We are on the expansion spree in the retail part where the capex is only in the form of opening more stores. As far as the backend is concerned, we are not looking at the major capex but our majority of the capex will be in the frontend, which will be opening more and more retail stores.
We are expanding our base in the south now and we are looking at Gujarat, Kerala, Tamil Nadu and other southern states. So that we can expand our retail those indoor areas which are unrepresented or the penetration should be much more in future.
This year we have plans to add close to about 100 stores. It all depends on the space availability and the right location. However, we are quite optimistic that we should be able to achieve this target of 100 stores.
So far in the first quarter and second quarter we have been able to open 40 stores so far and we hope that in the next two quarters we should be adding another 60 stores.
Ekta: Can you just give us the sense in terms of the consolidation that you have planned to undertake for the business? We do understand that you are planning to merge Liberty Enterprises and your group marketing division, the rationale behind that and what would be the cost entailment?
A: It would be difficult to give any specific numbers because the consolidation process is already there. The consultants had been engaged already. They are working on the legal legalities as well as on the acquisition cost including the asset valuations and brand valuations. Once their study is complete we will be in a position to share much more details.
This is basically to consolidate the companies, which are in the group domain. We would like to have a single identity of the business and the Liberty Shoes limited. So that there is no related party transaction going forward in the business.
Reema: How soon will the consultants give you a report when are you hoping to complete this consolidation?
A: We hope that this should be totally completed by end of this year barring the legal requirements or legal compliances of all the governmental situations. However, we hope that this report should be available soon. It is difficult to decide any particular date, but we are hopeful that it should be available in this quarter, which is the forthcoming quarter and our process will be on very soon.
Liberty Shoes stock price
On September 26, 2014, Liberty Shoes closed at Rs 282.05, down Rs 5.8, or 2.01 percent. The 52-week high of the share was Rs 351.00 and the 52-week low was Rs 79.10.
The company's trailing 12-month (TTM) EPS was at Rs 8.14 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 34.65. The latest book value of the company is Rs 80.73 per share. At current value, the price-to-book value of the company is 3.49.
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